The cost of health care continues to increase as the health care industry becomes more complex, specialized, and sophisticated. The proportion of the gross domestic product that is accounted for by health care is expected to gradually increase over the coming years as the population ages and new medical procedures become available. Over the years, the delivery of health care services has shifted from individual physicians to large managed health maintenance organizations. This shift reflects the growing number of medical, dental, and pharmaceutical specialists in a complex variety of health care options and programs. This complexity and specialization has created large administrative systems that coordinate the delivery of health care between health care providers, administrators, patients, payers, and insurers. The cost of supporting these administrative systems has increased during recent years, thereby contributing to today's costly health care system.
A portion of administrative costs is represented by systems for creating, collecting, and adjudicating payment requests made by the healthcare provider. Such payment requests typically include bills for procedures performed and supplies given to patients. Processing the payment requests by the healthcare provider is a necessary component of the healthcare delivery process. However, systems for processing the payment requests also represent transaction costs that directly reduce the efficiency of the healthcare system. Reducing the magnitude of transaction costs involved in processing the payment requests by the healthcare provider would have the effect of reducing the rate of increase of health care costs. Moreover, streamlining payment request processing by the healthcare provider would also desirably increase the portion of the health care dollar that is spent on treatment rather than administration.
Several factors contribute to the traditionally high cost of health care administration, including the processing of payment requests. First, the volume of payment requests by healthcare providers is very high. Healthcare providers may process hundreds to thousands of payment requests each day and thousands to millions of requests annually. In addition, the contractual obligations between parties are complex and may change frequently. Often, there are many different contractual arrangements between different patients, insurers, and health care providers. The amount of authorized payment may vary by the service or procedure, by the particular contractual arrangement with each health care provider, by the contractual arrangements between the insurer and the patient regarding the allocation of payment for treatment, and by what is considered consistent with current medical practice.
Generally, in the collection process, the less time a collector spends in direct contact with a debtor, the greater likelihood a case remains unresolved and the costs to collect increases. The collection process typically consists of the following steps: a first letter requesting payment, a second letter requesting payment, phone calls requesting payment of the debt, a debtor's request for additional information, an appeal filed with the debtor, a financial background check on the debtor, an asset search, initiation of a suit, pretrial conference, trial, and resolution of the debt. Time and money expenditures increase with a resulting decrease in likelihood of recovery the farther along the collection process progressed through these steps. Without an automated routine, repetitive collector tasks such as copying, referrals, matching to file, memo generation and retrieving as well as a lack of automated scripted dispute handling, on line payment plan capabilities, electronic data transfer and, collection strategy development took away from the collector's time to spend in direct contact with a debtor. Further, when the case is referred to an outside collection agency or attorney, the costs to collect dramatically increase and the chances of recovery dramatically decrease.
More particularly, when a payer rejects or denies all or a portion of a claim, the payer typically returns an invoice/remittance or other written correspondence with an explanation of why the claim has been rejected or denied. Often, the received information is not handled effectively by the healthcare provider's cashier office, which traditionally has focused on the expeditious posting of cash. If the cashier does record the rejection/denial information accompanying the returned invoice or remittance to facilitate subsequent review, typically it does not trigger specific follow-up activity.
In some payment processing systems, rejection/denial codes have been used to focus personnel on outstanding issues. However, problems in these systems included: 1) using nonstandard rejection/denial codes, especially among multiple healthcare facilities thereby limiting the leverage of individual personnel, 2) assigning rejected/denied claims to specific personnel for follow up was done manually or done automatically on a periodic basis and not in real time, 3) processing of the rejection/denial information often required laborious, manual follow up procedures (e.g. individual retrieval and review of a lengthy payer contract, or a review of the remittance voucher or correspondence from the payer that had already been processed by other personnel), and 4) a lack of monitoring to ensure that personnel responded to the payers requests. In an attempt to maximize the number of payment request that are paid, personnel needed to spend inordinate amounts of time investigating unpaid receivable accounts. The time spent in such activities represents further efficiency losses in the health care system.
In view of the foregoing, would be desirable to provide a method and computerized system for managing healthcare receivable accounts. More specifically, it would be desirable to provide a system for substantially automating the work in process management of collection activities for healthcare receivable accounts. Accordingly, there is a need for a system and method for processing unpaid healthcare claims that overcomes these and other disadvantages of the prior systems.